Regardless Of Estate Size, the Revocable Living Trust Remains the Foundational Tool of the Estate Plan

March 10, 2018
By
Brown & Vogel, LLC

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The revocable living trust acts as a will substitute and contains instructions
for managing your assets during your life as well as upon death. It is
created during your lifetime and becomes effective immediately when you
sign it. But it will only control those assets that are transferred into
the name of the trust. You can transfer property to the trust and still
maintain control and use of all the property while living. You can revoke
or change the trust at any time. You can be the trustee of your trust
while living, and because these transfers are made ahead of time, upon
your mental incapacity or death, your successor trustees can step into
your shoes and start handling your financial affairs without a court order
or the need to establish a conservatorship.

Because a will becomes effective only upon death, it does not address what
happens in the event you become mentally incapacitated and can no longer
handle your financial affairs. With a Will-based estate plan, attorneys
typically utilize a Durable Power of Attorney in which one or more persons
are designated as your agent. If there is no Durable Power of Attorney,
or in the event the Power of Attorney is not accepted by a financial institution,
your loved ones might have to file a petition with a court to be appointed
as a Guardian and/or Conservator for the disabled person. If approved
by the court, the Guardian will be granted specific powers to administer
your assets and daily personal needs.

Upon your death, a will becomes a public document through the probate system.
Your financial data and list of beneficiaries is on display for all who
care to see. A trust, on the other hand, generally remains a private document.

If you are married, the revocable living trust may provide for the creation
of a marital trust and family trust upon the death of the first spouse.
You’ll sometimes hear these referred to as “A and B Trusts.”
These “subtrusts” are designed to both maximize a married
couple’s total estate tax exemptions, and to protect the trust assets
against the surviving spouse’s “creditors and predators”
– which may include a new spouse should the surviving spouse remarry.

After both spouses have died, assets may be distributed to the couple’s
children or other beneficiaries in a variety of ways – including:

immediate outright distributions,

staggered distributions at various ages,

lifetime trusts with liberal standards,

lifetime trusts with conservative standards, or

special needs trusts.

When revocable living trusts first became popular in the 1980s, most thought
that they were only for the wealthy. Over time, living trusts became a
popular planning tool for any size estate and affluent families began
to focus more on wealth transfer and tax savings with the use of a variety
of irrevocable trusts, partnerships, and other planning tools. Nevertheless,
even the most sophisticated planning solutions will likely continue to
recommend the revocable living trust as the best choice to serve as the
foundation of the overall plan.

The information on this website is for general information purposes only.
Nothing on this site should be taken as legal advice for any individual
case or situation. This information is not intended to create, and receipt
or viewing does not constitute, an attorney-client relationship.